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| Calculating Your Retirement Expenses |
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Your first step in determining how much you need to save is to estimate what your retirement expenses will be based on your current expenses. This will help you estimate how much retirement income you’ll need to maintain your current standard of living when you are no longer working.
Complete this  worksheet to estimate your retirement expenses.
Also, keep in mind:
Life expectancy
The good news is retirees are healthier and more active than ever before. The bad news is it can cost a lot of money to live an active retiree lifestyle. Plus, you might spend 20 to 30 (or more) years in retirement. That means your retirement savings might need to last a long time.
Retiree medical costs
Fidelity Investments estimated that a typical couple who retired at age 65 in 2007 would need approximately $215,000 to cover out-of-pocket medical costs during retirement. That will cover prescriptions, deductibles and Medicare premiums. What do you think your medical costs might be when you retire?
Inflation
Can you imagine what prices might be like when you retire? The projections below will give you some idea.
Remember that when you retire you will be on a fixed income. (You can expect only a slight increase each year to your Social Security income.) As prices rise, your money will have to stretch further. The time to prepare for those higher costs is now. Make sure you’re saving enough to live once you retire.
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